Market Orders

If your trade is a market order, it will go straight into the market.

This is also known as “At Best”; in other words, you’re asking the broker to buy or sell on your behalf at the best rate currently available on the market.

This is the most common type of CFD orders.

Pending Orders

For this trade to be executed, the market needs to be open.

A pending order is the trader’s instruction to the broker to buy or sell a security in future, under predefined conditions, when the price reaches a specific level.

Limit Orders

The most popular pending order is a limit order or “At Limit”, which means if price equals your limit, your trade becomes a market order.

Stop orders

A stop order is an instruction to buy or sell if the price reaches X.

Most traders use a stop order as a safety net, especially if they are not monitoring the market closely.

When this order is executed, the trade is completely closed.

A stop order can be set for a limited period or for an indefinite time ( a “good till cancelled” or GTC order).

In either case, when the price of cryptocurrency reaches the stop price you’ve set, you can’t cancel or amend your stop order.

If you set a stop order, the broker will always try to fill your order at the price you’ve set, but if that price is unavailable, your order will be executed at the next available price.

In other words, a trade with a stop order is always filled at either the price equal to the specified one or the next available price (slippage).

But in any case, the execution of stop orders is guaranteed.

Where to put a stop loss?

It is always a trade-off between having a close stop, minimising losses, and giving a trade enough space to breathe at the risk of a larger loss.

A 20-day price channel can give you an idea for stop loss. Here we see Ethereum with a 20-day high/low chart.

Say you were to go long on ETH. You would place your stop at the 20-day low price (red square line).

As the price moves up, so does the 20-day low, and you are locking in profits.

This strategy is also known as trailing your stop. Think of it as a safety net.

As long as the value of cryptocurrency keeps going higher, you stay with the trade and keep moving the stop up.

Of course, at some stage, the trend ends, and your stop will close you out.

Remember, you can do the exact opposite for a short (down) trade, so your stop would be the 20-day high.

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